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Recent work suggests non-financial firms have acted like financial intermediaries particularly in emerging economies. This paper corroborates these findings but then asks “why?” The results indicate evidence for carry-trade activities, but they are focused on countries with higher levels of capital controls, particular controls on inflows. There is little evidence for such activities given other potential motives. It is posited that this phenomenon is due more to the reaction of countries in the face of low global interest rates, quantitative easing and strong capital inflows than incomplete markets or the retreat of global banks due to impaired balance sheets or tighter regulations.
Access to capital is crucial for economic development. In many developing nations, however, high default rates present a serious obstacle to the creation of efficient capital markets. Defusing Default examines the problem of default in various countries throughout the Americas as well as public and private means of encouraging repayment of debts. Encompassing theoretical approaches and empirical d ... (View publication)
After decades using monetary aggregates as the main instrument of monetary policy and having different varieties of crawling peg exchange rate regimes, Colombia adopted a full-fledged inflation-targeting (IT) regime in 1999, with inflation as the nominal anchor, a floating exchange rate, and the short-term interest rate as the main instrument. This paper examines the experience of the Colombian Ce ... (View publication)
What are the sources of structural volatility in Latin America? To address this question, Macroeconomic Volatility in Reformed Latin America focuses on the factors responsible for macroeconomic instability in three Latin American economies: Argentina, Mexico, and Chile. It finds that volatility in these countries can largely be traced to two critical weaknesses: weak links with international finan ... (View publication)
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